The housing law bulletin issued by Garden Court Chambers every week had some interesting links to housing benefit related items this week. Most interesting of all perhaps was a link to the Government’s response to the Work & Pensions Select Committee’s report on the forthcoming housing benefit changes.
Here are a few points I have picked up from the report
Reduced rent levels and the discretionary housing benefit safety net
The government expect the housing benefit cuts to have a knock on effect and reduce rent levels in the private sector.
They appreciate that many people will have to move and are providing additional money for discretionary housing benefits for this. You may want to read their response to this point in full:
The Government acknowledges that the caps will result in some tenants moving from the more expensive areas. However there is already a substantial annual turnover rate of about 40% in the private rented sector, and some of those who will need to move would have done so in any case. In all but three of the most central areas of London at least 30% of properties will still be affordable within Local Housing Allowance rates.
The maximum weekly rates of Local Housing Allowance provide a generous level of support. The maximum rate payable will be £400 a week which equates to annual support for housing costs at over £20,000 a year. A family paying an average proportion of their income in rent would require an income of at least £80,000 a year to be able to afford to pay this level of housing costs.
Still researching
The question which follows this points out that a few highly publicised cases have rather distorted the public perception of the situation and seems to be ‘driving policy changes which affect a much wider range of people’. The committee also express concern that there will be a disproportionate effect on ethnic minority groups and disabled people.
The Government’s response to this is, more or less, that they are still doing research on it. Not a very satisfactory answer in the circumstances.
Concerns about the effect on retired people are answered by saying that the Discretionary Housing payments fund is being increased.
Increased evictions and homelessness
There is quite a long answer on the concerns raised about the possibilities of increased evictions and homelessness which the committee think may be greater than the government think. The government answer this by saying:
- They don’t agree
- They are putting in place extra measures and funding
- If landlords would only reduce their rent by £10 per week everything would be a lot better
- Local authorities will be able to pay rent direct to landlords (something they have been asking for, for a long time) if they agree to reduce rent to an ‘affordable level’
- The Localism Bill will allow Local Authorities to put people in priority need in accommodation in the private sector, even if they don’t agree to this (or rather if they refuse to agree, the Local Authority will not be obliged to find them somewhere else)
Comments expressing concern about the availability of accommodation in the private sector to meet the demand in the context of a shortage of social housing and high demand for rental accommodation are met, more or less, with the answer that they are working on it.
Conclusion
Those are the main points which jumped out at me. You may pick up on other points (you can read the response in full here).
It is clear however that great reliance is going to be put on the discretionary housing benefit. In this context you may want to look at the good practice guide which has now been issued and which you can see here.
Their other strategies appear to be:
- A belief that rents will go down to match the lower benefit rates
- Landlords will also reduce rent in return for getting paid benefit direct
- Hope
I am not entirely convinced that landlords will be willing to reduce rents in a time of housing scarcity, but I could be wrong. What do you think?
Note that I will be talking to my March podcast guest Steve Perrons shortly about renting to housing benefit tenants. If you have any questions you would like me to ask him, please use the form on this page.
I agree with you. With the increasing number of evictions and homelessness, it would be nice if landlords would lower rent. However, they cannot be forced to lower the rent. This is a difficult issue. Thanks for the post!
I wonder how Discretionary Housing Payments will work in practice. The clue is in the word Discretionary.
In the past 2 years I have managed to prise just 1 measly DHP payment to clear someone’s rent arrears, and I work for the council
I did a bit of googling on the ‘discretion’ Criteria. The rules state that there is no specific criteria but the council should take into account the following:-
has to pay child maintenance
has to pay legal costs
has extra heating costs because he/she spends a lot of time at home because they are sick or disabled
has additional travel costs because he/she travels to a doctor or hospital or cares for a relative or friend.
Something I wonder about if the proposed changes come into effect.
Under the rent deposit scheme the council cover the deposit either with cash or by a letter which serves as a bond. They also pay the first months rent upfront therefore the landlord is paid in advance as he/she would be if renting to a private tenant. This first months rent paid in advance by the council then has to be paid back by the council tenant and then as the HB is paid in arrears at the end of the tenancy the final payment is actually an overpayment of one month as the first month had been paid in advance. The tenant would then use this to either clear the rest of the debt to the council or if they have finished paying off the council for the first months rent in advance they are reimbursed.
If the changes take place and the rent is paid directly to the landlord or letting agent, who is to say they will return the overpayment at the end of the tenancy? This could leave the council tenant severely out of pocket when they have a low income already, they could see themselves in the position of still owing the council money so can not be rehoused and stuck between the council who would still be demanding repayment of the debt and taking the landlord/lettings agent to court to recover the overpayment to cover their debt to the council.
This would cause extreme stress and hardship to those with a family or disabilities.
Yes you can make changes to make council tenants appear more attractive to private landlords to help the housing crisis, but steps have to be taken to protect the vulnerable tenants in the middle. If the changes were to be implemented, what would be introduced to protect the tenants caught in the middle?
The Council do not always pay the first months rent “Up-front”. In my area they pay in arrears. The so-called “Bond” is useless when you need to claim on it – there are so many get-out clauses most – if not all- Landlords in my own area refuse Housing Benefit applicants who want to use the Housing Bond. Furthermore, Housing Benefit tenants in this area are allowed to leave one landlord in serious rent arrears, and be given another “Housing Benefit” property without having to pat their arrears – to the unfortunate next Landlord being advised of the cunning of their Tenants. Needless to say, “Housing Benefit” in this area is not welcomed by Landlords with good quality properties in good areas. The Councils attitude is making this situation 10 times worse. Sadly we used to try to help H/B applicants – we can no longer afford the risk. Furthermore, there is £150 a month difference between private Tenants and Housing Benefit Tenants. If you had a property to rent – what would you do in the circumstances? After all, most Landlords have mortgage interest to pay, and they cannot allow themselves to be constantly taken advantage of.